Multiple Choice
You are comparing two annuities which offer quarterly payments of $2,500 for five years and pay 0.75 percent interest per month.Annuity A will pay you on the first of each month while annuity B will pay you on the last day of each month.Which one of the following statements is correct concerning these two annuities?
A) These two annuities have equal present values but unequal futures values at the end of year five.
B) These two annuities have equal present values as of today and equal future values at the end of year five.
C) Annuity B is an annuity due.
D) Annuity A has a smaller future value than annuity B.
E) Annuity B has a smaller present value than annuity A.
Correct Answer:
Verified
Correct Answer:
Verified
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